Amicable settlement proposed by the Board of Directors of the NBB and accepted by BANK X

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Amicable settlement proposed by the Board of Directors of the NBB and accepted by BANK X This amicable settlement, reached with due regard to the report of the Auditor dated 24 August 2015, was proposed by the Board of Directors of the National Bank of Belgium to BANK X on 1 September 2015, and was accepted by the latter on 23 September 2015.

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Having regard to Articles 36/9 and 36/10 of the Act of 22 February 1998 laying down the organic statute (hereinafter referred to as "the Act of 22 February 1998") of the National Bank of Belgium (hereinafter referred to as the "NBB"); Having regard to the decision of the Board of Directors of the NBB of 28 August 2013, whereby it was established that there were serious indications of the existence of a practice on the part of BANK X that could give rise to the imposition of an administrative fine within the meaning of Article 40 of the Act of 11 January 1993 on the prevention of the use of the financial system for money laundering and terrorist financing. The serious indications were related to BANK X's compliance with its vigilance obligation in respect of certain banking transactions carried out by one of its clients; Having regard to the decision of the Board of Directors of the NBB of 28 August 2013 to instruct the Auditor, pursuant to Article 36/9, §1, first paragraph of the Act of 22 February 1998, to conduct an investigation in the interest of and against the aforementioned serious indications; Having regard to the fact that the transactions to which this file relates took place in the period from 17 July 2008 to 24 June 2011, i.e. both before and after the amendment of the Act of 11 January 1993 by the Act of 18 January 2010. With regard to the facts dating from before 5 February 2010, i.e. before the entry into force of the legislative amendment of 18 January 2010, it can be established that the obligations imposed on credit institutions by the Act of 11 January at that time still exist today and that the legal and regulatory provisions in force since 5 February 2010 impose no less far-reaching obligations on credit institutions. The obligations applicable up to 4 February 2010 continued to exist after that date and to this day and can be sanctioned. Consequently, the investigation focused on compliance with the Act of 11 January 1993 and its implementing measures as applicable at the time of the facts in question, i.e. depending on the case, the legal and regulatory regime before or after the legislative amendment of 18 January 2010. Having regard to Articles 4, § 2 and 8 of the Act of 11 January 1993 as applicable before the legislative amendment of 18 January 2010 and to Article 14 of the same Act as applicable since the aforementioned amendment. In essence, these articles determine that institutions subject to the scope of the Act must display ongoing vigilance with regard to the business relationship and must ensure careful examination of the transactions carried out and, where appropriate, of the origin of the funds in light of the knowledge they have of their client, their activities and profile. Furthermore, these articles determine that the institutions in question must examine with particular attention the transactions that they consider particularly susceptible to money laundering or terrorist financing due to the nature of
the transactions or their unusual character given the client's activities, the accompanying circumstances of the transactions or the status of the persons involved, and that these institutions must draw up a written report on this examination. Having regard to Article 35 of the CBFA Regulation of 27 July 2004 concerning the prevention of money laundering and terrorist financing and Article 30 of the CBFA Regulation of 23 February 2010 concerning the prevention of money laundering and terrorist financing. In accordance with these articles, credit institutions must, within a period determined according to the risk, verify and update the client data that is relevant for anti-money laundering and counter-terrorist financing purposes when they have indications that this data is no longer up to date.

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Having regard to Articles 36 and 37 of the CBFA Regulation of 27 July 2004 concerning the prevention of money laundering and terrorist financing and Articles 31 and 32 of the CBFA Regulation of 23 February 2010. In accordance with these, credit institutions must first organize appropriate first-line supervision, i.e. supervision by the employees of the company who are in direct contact with the clients, whereby these employees, based on appropriate criteria made available by the institution, detect atypical transactions, pay specific attention to them and draw up a written report which they submit to the AML officer of the institution. Furthermore, credit institutions must, in accordance with these provisions, supplement this first-line supervision with second-line supervision, which uses an automated monitoring system that must meet certain specific requirements and which must deliver written reports on the detected atypical transactions to the AML officer. Having regard to Articles 12 and 13 of the Act of 11 January 1993 as applicable before the legislative amendment of 18 January 2010 and to Articles 23 and 24 of the same Act as applicable since the aforementioned amendment. Under these provisions, credit institutions must, when they know or suspect that a transaction to be carried out is related to money laundering or terrorist financing, notify the CFI before carrying out the transaction or, insofar as a report before the execution of the transaction is not possible, immediately after the execution of the transaction; Having regard to Article 36/10, § 3 of the Act of 22 February 1998 which allows the Board of Directors to propose an amicable settlement and, if its proposal is accepted, to publish it in a non-nominative manner on the NBB website; Having regard to the fact that BANK X effectively had the opportunity to take note of the findings of the Auditor's report before formulating its final comments in its letter of 18 May 2015; Having regard to the fact that the final report of the Auditor was sent to BANK X together with the proposal for an amicable settlement;

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Considering that the investigation in the interest of and against has led to the following findings:
In the period from 17 July 2008 to 24 June 2011, considerable amounts were deposited in cash on the personal accounts of Mr. A at BANK X on several occasions. These deposits were made on the same date as deposits of considerable amounts in cash on the accounts at BANK X of BVBA B, of which Mr. A was the managing director, in the majority of cases.
Furthermore, during the same period, two considerable cash withdrawals were made from the personal accounts of Mr. A, namely a cash withdrawal of €80,000 on 22 July 2009 from savings account 1 and a cash withdrawal of €250,000 on 6 June 2011 from savings account 2.
The aforementioned cash deposits were made following frequent visits by BANK X agent C to Mr. A – first in his restaurant B and subsequently at his home address – during which Mr. A handed Mr. C a cash amount that was to be deposited on the BANK X account of BVBA B on the one hand and a cash amount that was to be deposited on one of his personal BANK X accounts on the other hand.
The cash withdrawal of €250,000 also took place via BANK X agent C, who ordered the relevant cash amounts at the headquarters and handed them over to Mr. A. The cash withdrawal of €80,000 also took place via the BANK X agency of Mr. C.
The large cash deposits on the personal BANK X accounts of Mr. A as well as the two aforementioned cash withdrawals for large amounts had an unusual character both within the meaning of Article 8 of the Act of 11 January 1993 as applicable before the entry into force of the legislative amendment of 18 January 2010 and within the meaning of Article 14 of the same Act as applicable after this amendment, notably given:

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• the frequency of the cash deposits on the personal accounts of Mr. A, which each followed a visit by BANK X agent C to restaurant B and which in the majority of cases occurred simultaneously with cash deposits on the accounts of BVBA B at BANK X;
• the size of two cash withdrawals from the personal accounts of Mr. A, namely the cash withdrawal of €80,000 on 22 July 2009 from savings account 1 and the cash withdrawal of €250,000 on 6 June 2011 from savings account 2.
  The investigation shows that BANK X did not revise the AML risk profile of Mr. A after the initial risk profile determination until after the cash withdrawal on 6 June 2011 of €250,000, which led to a compliance investigation and a report to the CFI.
  The investigation also shows that the first-line employees of BANK X did not act on these transactions. They did not take the initiative to draw up a written report on them and to report the transactions to the central AML Unit of the bank. Given the circumstances of the cash withdrawals, i.e. the simultaneity of the cash deposits on the personal accounts of Mr. A and on the current account of BVBA B, they should at least have asked themselves what the origin of the funds deposited on the personal accounts of Mr. A was. They should also have asked themselves this question given the size of the cash withdrawals from the personal accounts of Mr. A. They should have considered these transactions as atypical from that perspective and reported them to the AML officer for further analysis. With regard to second-line supervision, the finding is that the central AML Unit of the bank did not act on the aforementioned cash deposits. The finding is that these deposits, although cumulatively large, did not generate an alert in D, the bank's second-line monitoring system, because they were below the amounts of the filters per day and per week in D. With regard to the cash withdrawals, the investigation showed that no filter was provided for this in D. The central Compliance and AML services of the bank did not act on the cash withdrawal of €80,000 on 22 July 2009 from account 1. The cash withdrawal of €250,000 on 6 June 2011 from savings account 2 is the first and only one of the aforementioned transactions that, following the launch of the procedure for the delivery of cash by the headquarters in the local agencies, led to an investigation by the central compliance services. This investigation ultimately led to a report by BANK X to the CFI on 9 July 2011.

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Having regard to the statements of BANK X recorded during the investigation which confirm the factual elements described; Considering that BANK X has provided full cooperation in the course of the investigation and having regard to the other elements in the file which constitute mitigating circumstances on the part of BANK X; Considering that the amount of the amicable settlement must be proportional to the nature of the facts; For these reasons, the Board of Directors of the NBB proposes to BANK X an amicable settlement within the meaning of Art. 36/10, § 3 of the Act of 22 February 1998 for the payment of the sum of €50,000; If this proposal is accepted, this allows for a definitive settlement of the procedure instituted against BANK X. Pursuant to Art. 36/10, § 3 of the Act of 22 February 1998, the amicable settlement will be published in a non-nominative manner on the website of the NBB. The amounts to be paid in the context of this settlement will be collected for the benefit of the Treasury by the Administration of the Land Registry, Registration and Domains.